Gap Auto Insurance

Gap Auto Insurance

Gap auto insurance as the name suggests is the insurance coverage that covers the "gap" between what you currently owe on your auto loan and the current market value of your vehicle. It is specifically designed in such a way that it protect you in the event that your car is stolen or totaled and the amount your normal auto insurance will cover is less than what you owe on your loan. Gap auto insurance also covers with a vehicle lease to protect the leasing company in the event that the car is lost or destroyed.

The above explanation can be best explained with the help of an example suppose your loan amount is $24,000 on a new vehicle and immediately after signing the loan papers you total the car, then your car insurance will likely only give you the Blue Book quote amount. You would receive a check for around $21,000, but you still owe an excess of $3,000 on the loan. This gap in coverage is covered by the gap auto insurance policy. This is how gap works.

Once the car is driven off the car lot the car’s worth fall considerably, so this type of coverage is a must have for any new car purchase. In the case of an accident, this type of coverage can guard your outlay.

Because of the afore said advantage more and more auto insurance companies are starting to offer gap insurance, including AIG, Progressive, and Allstate. Because of this, many states now entail that all companies who sell auto insurance also offer this extra coverage. If your current company does not offer gap auto insurance, you can often purchase it from a company as an independent policy.

There are some rules to follow to help you decide if you need gap car insurance:

- Do you owe more on your car than it is worth? If so, then you need to buy it.

- Do you live in a high theft area? If so, you may wish to buy the added coverage it provides.

- Do you like protecting your investments? If so, this insurance is for you.

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